Two reports have come from America today. There is a report by S&P which is regarding India. The second report is from Moody's which is regarding the economic condition of China. China has suffered a major setback in both the reports. Where Moody's has reduced China's rating from stable to negative. On the other hand, S&P has praised India's economic growth. It has also been claimed that in the next 7 years India will become the third largest economy in the world. This means that China's second position is under threat. Let us also tell you what has been said in both the reports?
Let's start with Moody's first…
The world's renowned rating agency Moody's has sounded alarm bells for China and its President Xi Jinping. Moody's has given a big blow to China's economy in its latest report. Moody's has transferred China's economic outlook from stable to negative. China is already very worried about its declining economic growth. Also the real estate sector is continuously sinking. There is no chance of it improving soon. Moody's has given overall rating to China A1. Moody's has expressed apprehension that China's property sector will be smaller in proportion to the entire economy than before the property reform in 2021. According to Moody's report, it is expected to be 4 percent in the financial years 2024 and 2025. Whereas from financial year 2026 to 2030 it may remain up to 3.8 percent.
India will be the biggest challenge for China
India's economic pace is likely to remain very fast. According to the latest report of S&P, India can become the third largest economy in the world by the year 2030. Also, India's GDP can reach $7 billion in the financial year 2026-27. This means that in the next few years, India will become the biggest challenge to China on the world economic platform. S&P believes that a big test for the country is to take advantage of the huge opportunity and make itself the next big global manufacturing center.
How much can India's GDP be?
S&P's report Global Credit Outlook 2024: New Risk, New Playbook states that the GDP growth rate in the current financial year i.e. March 2024 is estimated to be 6.4 percent. It is expected to reach seven percent in 2026. The Indian economy grew at the rate of 7.2 percent in the financial year 2022-23. India's GDP growth was 7.8 percent and 7.6 percent in the June and September quarters respectively. According to S&P, developing a strong logistics infrastructure will be important in transforming India from a service-dominant economy to a manufacturing-dominant economy.
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